That do a factor ?
For’Improve and secure their cash flow, small and medium -sized enterprises must provide effective financing solutions. Same thing for VSEs as well as micro-enterprises. Factoring is undoubtedly at the top of the list of the most popular solutions.
That’do’a factor ? What is the operating principle of the’factoring ? What are the advantages of services’a factor ? All answers in this post.
What are the missions of’a factor ?
Also known as a company D’factoring or factor, the Factor simply presents itself as a financing company. Its primary mission is to Strengthen the cash flow of SMEs And TPEs By taking charge of their invoices. To do this, it offers various services. Among the most common, we quote:
- THE Treasury financing : the factor partially or entirely advances the sums not perceived by its customers.
- THE Debt recovery : the factor ensures the revival of debtor clients, is responsible for the procedures related to the receipts and takes the judicial measures which are’impose in the event of non-payment of the debtor client.
- I’credit insurance : the factor offers to the’company a contract’insurance in order to cover any risk of non-payment.
Factor or company D’Factping: operation
From the moment you decide to use services’a factor, you must sign a contract’factoring. The latter defines the services provided by the company D’factoring. It also sets the conditions for the sale of receivables.
Indeed, the operating principle of’A factor is almost similar to that of’A classic financial organization:
- I’company establishes its customer invoice;
- She signs with the company D’factoring a contract;
- The factor pays him the sum mentioned on the customer invoice (by taking the commission of’factoring, the financing committee and participation in a guarantee fund);
- The factor then takes care of the Covering of the claim.
Note that’Before signing a contract with a company, the Factor must assess the financial situation thereof as well as the solvency of the debtor customer. The goal is to minimize as much as possible the risks of’unpaid.
Call on a factor: what advantages ?
For SMEs and VSEs, the use of services’A factor presents itself as a solution that is both practical and economical. Practice in the sense that they can preserve their cash flow, therefore ensure the proper functioning of their activities on the short and medium term.
Indeed, these companies n’will have more to wait for Payments of debtor customers, since the sum will be advanced by the company D’factoring. Economical, because VSEs and SMEs n’will not have to worry about all operations relating to the recovery of claims. From the moment the contract’factoring is signed, this task returns to factor. Better yet, you freed yourself from all your recovery problems and you can devote yourself to your activities with confidence.